Advertising costs for e-commerce businesses are rapidly on the rise. Overall, customer acquisition costs have gone up nearly 50 percent just within the past five years. That trend is going to continue, and it’s obviously going to make spending an increasingly less viable strategy in the e-commerce marketing plan of most brands.
There’s no reason this should cripple your business, though. If you’re staying on top of things and preparing for the future, you understand the power of customer retention to combat these rising costs. If you can keep your customers coming back and continually increase customer lifetime value, the pressure to spend will start to ease.
There are many different ways to go about deploying an effective plan for customer retention. The best approach is largely going to be dependent on your business and what you’re trying to accomplish. To gain a better understanding for some of the best practices in improving customer retention, we asked the experts who have first-hand experience to tell us what they’re doing. Here’s what they had to say:
Ridester is a resource that assists rideshare drivers to help them increase income and ratings. The business is owned by Brett Helling, a serial entrepreneur who is using his past experience as an Uber driver to navigate the direction of Ridester. The company is on the rise in the e-commerce space, having recently used SEO and content marketing to grow site traffic from 253,000 visitors per month to 650,000.
A strong focus on customer retention has been a major part of the plan in growing Ridester’s visibility. Here’s what Brett had to say about the emphasis on customer retention:
The best customer of any business in any market is the returning one. This shows that your business is trustworthy and can be a potential lead. A happy customer will tell others about your business and will also be doing a marketing job for you.
There are many ways to keep your customer retention positive, but here are a few specific things to remember:
- Selling quality products and services will automatically increase your customer retention and the customer would be delighted to visit your business.
- Make sure your pricing is competitive towards your competitors and also consistent with your customer. A trustworthy business will always have the best pricing plan with a margin of profit.
- Creating a quality customer service experience can also be a plus point in customer retention because if the individual had a query of any services that you offer, he or she might need quality customer service. Like the quality of product or services increases, so should your customer service.
- And finally, your shop layout. If you have a retail business, the layout should be creative enough to turn those wandering customers into a permanent customer. An e-commerce business will require the best and if it’s easy to understand the layout of your business, that should attract the customer towards your products or services.
The Slumber Yard is an 11-person company based in Reno, Nevada, founded byJeff Rizzo. It is unique within the e-commerce space in that the business doesn’t actually sell anything. Instead, the site relies largely on providing reviews of popular home goods products with a specialization in mattresses.
Customer retention is a significant part of the strategy for success at The Slumber Yard, especially on YouTube, which Jeff explains:
We have over 400,000 subscribers across our various YouTube channels and are 100 percent dependent on customer retention. We need subscribers to watch our videos and continue to watch our videos, and in that vein, we’ve implemented several strategies to not only retain subscribers but also to increase engagement.
The first thing we’ve done is highlight key subscribers — individuals that are particularly active in engaging with us. We frequently discuss individual subscribers within videos and give a shout out to new subscribers at the end of many of our videos. This has worked beautifully with average view times increasing over a three-month period.
We’ve also started running monthly giveaways where multiple subscribers win prizes valued at more than $300. We end up shelling out about $800 per month worth of giveaway items. I know that sounds like a lot, but it has helped us build our email list, our following on other social media sites, and drastically improve engagement.
What it boils down to is that we are constantly trying to find ways to thank, and engage with, our audience. We think a lot of reviews businesses completely miss this.
Auto Accessories Garage is a fastest-growing e-commerce company in automotive parts and accessories. The wide range of products available on the site and a strong emphasis on customer service have been pillars of their success. Additionally, the business focuses heavily on making sure customers are coming back.
Here’s what Auto Accessories Garage content manager Jake McKenzie had to say about their customer retention strategy:
One way we’ve tried to improve customer retention is to personalize our emails and avoid inundating our customers with marketing emails, especially immediately following an order. Some of our automotive accessories, such as snow plows or motorized truck bed covers, can be a fairly big purchase for our customers. Spending their money in such a way can take a great deal of thought and consideration.
As a result, we’ve found that some customers find it off-putting to receive a marketing email just a few days after they’ve pulled the trigger on a large purchase. To some, it may seem like they’ve already spent a lot of money with us and now we’re turning right around and asking for more money — in some cases before the product has even arrived. Our solution has been to temporarily remove customers who have recently made a purchase from our main email distribution list. Instead, these customers will only receive emails pertaining directly to their order and its shipment.
We’ve also segmented our e-mail list by the type of vehicle a customer has told us they drive. For example, a driver who owns a Jeep Wrangler will see a completely different email than a driver who owns a Ford F-150. In this way, we can build a more personalized relationship with our customers and show them that we understand their wants and needs when it comes to their automotive accessories.
Company Folders has been in business for 15 years, specializing in creating and selling customized folders to businesses. Founder Vladimir Gendelman has seen Company Folders grow it into one of Inc.’s 5,000 fastest-growing private companies in the U.S. three consecutive years. Here’s what Vladimir had to say about the customer retention strategy at Company Folders:
We offer a superior product compared to anyone else in our industry, so to improve customer retention, we revamp our customer service processes, procedures and habits regularly. For examples, we recently created and implemented a ‘Never/Always’ list of things to say and do when speaking with customers. Some examples include giving customers what they specifically need instead of directing them to our website; never saying ‘I don’t know,’ but instead finding out and getting back to the customer; or calling customers with bad or negative news instead of sending it in an email so that you can possibly help them come up with a solution.
The list is based on John R. DiJulius’ book, ‘The Customer Service Revolution: Overthrow Conventional Business, Inspire Employees, and Change the World.’ The book outlines how numerous companies have dominated their industries by making customer service their biggest advantages, showing that customers aren’t always just looking for the lowest prices.
Vaped is an e-commerce site selling all things vaporizers as well as providing guides on the best products. According to Vaped owner Christian Sculthorp, customer retention is extremely important to the success of his e-commerce store because they are prohibited from advertising on most major platforms. Here are the four things Christian says Vaped focuses on to ensure positive results through customer retention:
- We give free gifts with each purchase. Sometimes that may just be a package of Sour Patch Kids, but these little things matter to your customers. We also get people sharing this on social.
- We have a “refer-a-friend” program that works well. Each customer can give a coupon to their friend. If their friend purchases, they get a $20 coupon. It not only gets us more customers but helps retain our current customers.
- We offer fantastic customer service. If there’s even a small problem with an order, we make sure we rectify it. People respond well to customer service and go out of their way to recommend your business if they have a good experience.
- We email our customers! It may seem simple but we keep in touch with them and tell them about blog posts, new products or sales. This an important lever that not enough e-commerce businesses pull.
Devin Stagg, the marketing manager at Pupford, specializes in content, advertising, social media, search engine optimization, and all things marketing. Pupford strives to give every dog owner access to the best training resources and nutrition products for their pets. Obviously, the more regular customers Pupford can acquire, the better. That’s why the business has put a strong a strong emphasis on customer retention, as Devin explains:
The most effective thing we’ve found for improving customer retention has been through offering discounted subscription models. One of the biggest challenges for most e-commerce businesses is getting a buyer to make their second purchase. Once you can get a customer to make their second purchase, the likelihood of them making a third, fourth, or higher purchase skyrockets. By offering discounted subscription products to our products, we’ve been able to more effectively retain customers and increase our average lifetime value. Customers love knowing that they will be receiving a discount not just once, but for an extended period of times.
Depending on your average product cost in your store, the savings can be enormous for potential customers. If it’s something they know they will need to buy more than once, why wouldn’t they want to just set it and forget it? Creating subscriptions for your products is one of the most effective ways to retain customers without having to continually spend money on remarketing to them!
Paperlust is an Australia-based premium wedding and event stationery company. Customer retention can be a difficult task considering most of Paperlust’s customers are coming to them for one-time or infrequent purchases. To work around this, Paperlust is focused on providing exceptional customer experiences to bring consumers back, as explained by co-founder James Boston:
For Paperlust, customer retention is a big challenge as many of our products are once-in-a-lifetime (weddings) or infrequent (birthdays, Christmas) purchases. As such, our two main focuses for retention are creating a frictionless user experience and offering the highest levels of customer service.
Our products are customized using an in-browser design tool and we are constantly evolving it to reduce friction. Also, as more than half of our traffic is now mobile, we have introduced a mobile concierge system so that customers can leave their details and one of our designers will design the stationery for them.
To the second point, we believe that having passionate, engaged employees can deliver personal customer experiences that create customer loyalty. Our staff is inspired by where the company is headed and are compelled to share that passion with customers by delivering great customer service and interaction. This connects the company’s brand story from the inside out — from employees to consumers. We believe that organizations that treat their employees with respect and give them the necessary tools to do their job will build a team that will go the extra mile for the customers they serve.
Jason Patel is the founder of Transizion, a college and career prep company focused on helping students and professionals with college admissions, college planning, and career services. Transizion keeps customers coming back by proving they are committed to providing them with the best tools possible, as Jason explains:
First, we’re adding them to our automated email list and sending them company updates, ebooks, and helpful guides in a succession. The point is to provide them value despite the fact they’re already a customer. We want to show them that we won’t stop trying to improve their lives and solve their worries after the initial transaction. When customers know we’re trying to provide them value week after week, they’ll be more willing to come back and tell their friends about us.
Second, we send each customer personalized weekly progress reports. This shows attention to detail and dedication to the service. In e-commerce, customers want to know their money is safe and that they can trust their vendor. This personalization in the form of progress reports shows that we are aware of both their problems and the potential solutions.
Third, we’re always accepting and implementing feedback for our product. What this does is show customers developments and improvements in what they’re buying. This shows we’re never becoming stagnant. Our company and product will improve, and thus, the customers on board stand the most to gain.